Pizza Hut Moscow Essay

813 Words Aug 6th, 2013 4 Pages
PIZZA HUT - MOSCOW: CASE ANALYSIS
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Executive Summary:
Pizza hut is faced with challenges as they try to get their “toe in the water” and enter the market in Moscow. The challenges are: * Lack of standard supply chain process * Cultural clashes * Language barriers * Service differentiation for Ruble and hard currency customers * High exchange rates and complication in pricing (government versus black market rates) * Communication (disconnect between the local employees and the management team) * Employees had to work long hours and cover for absentees * Turnover and ongoing training for the new staff jeopardized the service and quality of Pizza Hut.
Proposed solutions include a complete analysis
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* Lack of mozzarella cheese availability. Cheese had to be imported until local producers were able to meet demand. Also, cows had to be put on a specific diet to be able to produce the right type of milk. * Russia desired local sourcing. But, quality and reliability was low. * Lack of refrigerated trucks to transport products. * Poor communication. * Lack of construction supplies. * Culture clash * Western aggressive working culture versus Russian’s relaxed working culture. * Unstable political system * Government closed both restaurants shortly after opening for not possessing sanitation permit. However, this was mainly due to power struggles between Russian government parties. * 300% increase on basic food product prices and only 20% rise in wages. Pizza Hut had to increase its price by 40%. Products were becoming less affordable to locals. * Need to purchase supplies from black market for higher price. * Human Resources * Pay incentive system was a failure. * Poor communication between Russian management and employees. * Employee count was 3 times more than western Pizza Hut due to low productivity. Local working laws required 2 days on and 2 days off schedule. * Harsh work rules. Workers were required to work 173 hours to receive salary of 600 rubles. Pay reduction for not meeting minimum work hours and

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